Marxism is the political practice and social theory based on the works of Karl Marx, a 19th century philosopher, economist, journalist, and revolutionary, along with Friedrich Engels. Marx drew on Hegel's philosophy, the political economy of Adam Smith, Ricardian economics, and 19th century French socialism to develop a critique of society which he claimed was both scientific and revolutionary. This critique achieved its most systematic (if unfinished) expression in his masterpiece, Capital: A Critique of Political Economy (Das Kapital).

Since Marx's death in 1883, various groups around the world have appealed to Marxism as the intellectual basis for their politics and policies, which can be dramatically different and conflicting. One of the first major splits occurred between the advocates of social democracy, who argued that the transition to socialism could occur within a democratic framework, and communists, who argued that the transition to a socialist society required a revolution. Social democracy resulted in the formation of the British Labour Party and the Social Democratic Party of Germany, while communism resulted in the formation of various communist parties.

Although there are still many Marxist revolutionary social movements and political parties around the world, since the collapse of the Soviet Union and its satellite states, relatively few countries have governments which describe themselves as Marxist. Although social democratic parties are in power in a number of Western nations, they long ago distanced themselves from their historical connections to Marx and his ideas. As of 2004, Laos, Vietnam, Cuba, and the People's Republic of China have governments in power which describe themselves as Marxist. North Korea is inaccurately described as Marxist, as both Kim Il Sung and Kim Jong Il have rejected conventional Marxist views in favour of the Korean "communist" variant, juche.

Some members of the laissez faire and "individualist" schools believe the principles of modern bourgeois states or big governments can be understood as "Marxist". Marx and Engels's Communist Manifesto include a number of steps that they believed a society would experience as workers emancipated themselves from the capitalist system such as "Free education for all children in public schools": some of these appear to have been implemented in the form of Keynesianism, the welfare state, new liberalism, and other changes to the capitalist system in some capitalist states. Some individualists believe that reformers in the capitalist system are (or were) "secret Marxists" as they support policies that are similar to those steps Marx and Engels said a developed capitalist society would go through. Some other individualists in common with Marx's theory of historical materialism see the capitalist reforms as harbingers of the future coming of communism.

To Marxists, on the other hand, these reforms represent responses to political pressures from working-class political parties and unions, themselves responding to perceived abuses of the capitalist system. Further, in this view, many of these reforms reflect efforts to "save" or "improve" capitalism (without abolishing it) by dealing with market failures, i.e., inefficiencies of the system. Most importantly, Marx did not favor "big government" as much as the "withering away of the state", i.e., the democratic subordination of the government to the people.

Hegel proposed a form of idealism in which the development of ideas into their contraries is the guiding theme of human history. This process, dialectic, sometimes involves gradual accretion but at other times requires discontinuous leaps -- violent upheavals of previously existing status quo. World-historical figures such as Napoleon Bonaparte are, on the Hegelian reading, symptoms and tools of the underlying impersonal dialectical process rather than shapers of the same.

Marx, and the circle of Young Hegelians of whom he was one, retained much of Hegel's way of thinking. But Marx, "stood Hegel on his head," in his own view of his role, by turning the idealistic dialectic into a materialistic one, in proposing that material circumstances shape ideas, instead of the other way around. In this, Marx was following the lead of another Young Hegelian, Ludwig Feuerbach.

Marx summarized the materialistic aspect of his theory of history, otherwise known as historical materialism, in A Contribution to the Critique of Political Economy:

In the social production of their existence, men inevitably enter into definite relations, which are independent of their will, namely relations of production appropriate to a given stage in the development of their material forces of production. The totality of these relations of production constitutes the economic structure of society, the real foundation, on which arises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production of material life conditions the general process of social, political and intellectual life. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness.

Marx emphasized that the development of material life will come into conflict with the superstructure. These contradictions, he thought, were the driving force of history. Primitive communism had developed into slave states. Slave states had developed into feudal societies. Those societies in turn became capitalist states, and those states would be overthrown by the self-conscious portion of their working-class, or proletariat, creating the conditions for socialism and, ultimately, a higher form of communism than that with which the whole process began. Marx illustrated his ideas most prominently by the development of capitalism from feudalism and by the prediction of the development of socialism from capitalism.

Political economy is essential to this vision, and Marx built on and critiqued the most well-known political economists of his day, the British classical political economists. Political economy predates the 20th century division of the two disciplines, treating social relations and economic relations as interwoven. Marx claimed the source of profits under capitalism is value added by workers not paid out in wages—a claim he found implied in the works of Adam Smith and especially in David Ricardo but never explicitly formulated. (Some of Marx's insights were seen in a rudimentary form by the "Ricardian socialist" school [1][2].) He developed this theory of exploitation in Capital: A Critique of Political Economy, a "dialectical" investigation into the forms value relations take.

Capital is written over three volumes, of which only the first was complete at the time of Marx's death. The first volume, and especially the first chapter of that volume, contains the core of the analysis. Hegel's legacy is especially overpowering here, and the work is seldom read with the thoroughness Marx urges in his introduction. The method of presentation proceeds from the most abstract concepts, incorporating one new layer of determination at a time and tracing the effects of each such layer, in an effort to arrive eventually at a total account of the concrete relationships of everyday capitalist society. This investigation is commonly taken to commit Marx to a species of labor theory of value.

Marx critiqued Smith and Ricardo for not realizing that their economic concepts reflected specifically capitalist institutions, not innate natural properties of human society, and could not be applied unchanged to all societies. Marx's theory of business cycles; of economic growth and development, especially in two sector models; and of the declining rate of profit, or crisis theory, are other important elements of Marxist economics.

The Austrian School were the first liberal economists to systematically challenge the Marxist school. This was partly a reaction to the Methodenstreit when they attacked the Hegelian doctrines of the Historical School, though many Marxist authors have argued that the Austrian school was a bourgeois reaction to Marx. The Austrian economists were, however, the first to clash directly with Marxism, since both dealt with such subjects as money, capital, business cycles, and economic processes. Eugen von Boehm-Bawerk wrote extensive critiques of Marx in the 1880s and 1890s, and several prominent Marxists—including Rudolf Hilferding—attended his seminar in 1905-06.

Marxists believe that capitalist society is divided into two powerful social classes:

the working class or proletariat: Marx defined this class as "those individuals who sell their labor and do not own the means of production" whom he believed were responsible for creating the wealth of a society (buildings, bridges and furniture, for example, are physically built by members of this class).

the bourgeoisie : those who "own the means of production" and exploit the proletariat. The bourgeoisie may be further subdivided into the very wealthy bourgeoisie and the petty bourgeoisie: those who employ labor, but may also work themselves. These may be small proprietors, land-holding peasants, or trade workers. Marx predicted that the petty bourgeoisie would eventually be destroyed by the constant reinvention of the means of production and the result of this would be the force movement of the vast majority of the petty bourgeoisie to the proletariat. An example of this would be many small business giving way to fewer larger ones.

At first the bourgeoisie, and now the proletariat, are considered to be the universal class, the section of society best equipped to take human progress forwards a further step.

Marx developed these ideas to support his advocacy of socialism and communism: "The philosophers have only interpreted the world differently; the point is, to change it." Communism would be a social form wherein this system would have been ended and the working classes would be the sole beneficiary of the "fruits of their labour".

Some of these ideas were shared by anarchists, though they differed in their beliefs on how to bring about an end to the class society. Socialist thinkers suggested that the working class should take over the existing capitalist state, turning it into a workers revolutionary state, which would put in place the democratic structures necessary, and then "wither away". On the anarchist side people such as Mikhail Bakunin and Peter Kropotkin argued that the state per se was the problem, and that destroying it should be the aim of any revolutionary activity.

Many governments, political parties, social movements, and academic theorists have claimed to be founded on Marxist principles. Social democratic movements in 20th century Europe, the Soviet Union and other Eastern bloc countries, Mao and other revolutionaries in agrarian developing countries are particularly important examples. These struggles have added new ideas to Marx and otherwise transmuted Marxism so much that it is difficult to specify its core.

It is common to speak of Marxian rather than Marxist theory when referring to political study that draws from the work of Marx for the analysis and understanding of existing (usually capitalist) economies, but rejects the more speculative predictions that Marx and many of his followers made about post-capitalist societies.

Other than control by the working class, Marx laid out no plans for the structuring of a communist society or of the society which the working class would build on the way to communism. He assumed the working class could do that for themselves and that it would be a productive society able to meet the needs of the people and much more. Marx was followed in his optimistic appoach by the political parties who adopted his theories and detailed plans for the structuring of socialist or communist society were not put forth or developed. With the success of the October Revolution in Russia a Marxist party took power, but without any blueprints for building the new society.

The 1917 October Revolution, led by Vladimir Lenin and Leon Trotsky, was the first large scale attempt to put Marxist ideas about a workers' state into practice. The new government faced counterrevolution, civil war and foreign intervention. Socialist revolution in Germany and other western countries failed and the Soviet Union was on its own. An intense period of debate and stopgap solutions ensued, war communism and the New Economic Policy (NEP). Lenin died and Joseph Stalin gradually assumed control, eliminating rivals for power. He intituted a ruthless program of industrialisation which, while successful, was prosecuted at great cost in human suffering.

Modern followers of Trotsky maintain that as predicted by Lenin, Trotsky, and others already in the 1920s, Stalin's "socialism in one country" was unable to maintain itself, and according to some Marxist critics, the USSR ceased to show the characteristics of a socialist state long before its formal dissolution.

Following World War II, Marxist ideology, often with Soviet military backing, spawned a rise in revolutionary communist parties all over the world. Some of these parties were eventually able to gain power, and establish their own version of a Marxist state. Such nations included the People's Republic of China, Vietnam, Romania, East Germany, Albania, Poland, Cambodia, Ethiopia, South Yemen, Yugoslavia, and others. In some cases, these nations did not get along. The most notable examples ware rifts that occurred between the Soviet Union and China, as well as Soviet Union and Yugoslavia (in 1948), whose leaders disagreed on certain elements of Marxism and how it should be implemented into society.

Many of these self-proclaimed Marxist nations (often styled People's Republics) eventually became authoritarian states, with stagnating economies. This caused some debate about whether or not these nations were in fact led by "true Marxists". Critics of Marxism speculated that perhaps Marxist ideology itself was to blame for the nations' various problems. Followers of the currents within Marxism which opposed Stalin, principally cohered around Leon Trotsky, tended to locate the failure at the level of the failure of world revolution: for communism to have succeeded, they argue, it needed to encompass all the international trading relationships that capitalism had previously developed.

In 1991 the Soviet Union collapsed and the new Russian state ceased to identify itself with Marxism. Other nations around the world followed suit. Since then, radical Marxism or Communism has generally ceased to be a prominent political force in global politics, and has largely been replaced by more moderate versions of democratic socialism—or by capitalism, sometimes becoming more democratic but often retaining an authoritarian government.